In today’s rapidly evolving business landscape, the strategic alignment of a company’s values with its operations is paramount. With growing scrutiny surrounding ESG initiatives, it is crucial for companies to reassess their approach and messaging. It’s important to note that, while there may be backlash against the term “ESG,” this does not signal a decline in the importance of these values. Instead, it underscores the need for companies to approach these topics with precision while deeply integrating them into their core business strategies.
Directors play a critical role in ensuring that a company’s values resonate with both internal and external stakeholders. Public sentiment strongly supports the principles underpinning ESG, as consumers and investors alike increasingly demand that businesses reflect societal values. For example, a Harris Poll revealed that 78% of Americans believe companies should mirror the diversity of the U.S. population, linking racial diversity to broader customer reach, enhanced innovation, increased profitability and improved employee retention. Furthermore, younger generations, particularly Gen Z and Millennials, prioritize sustainability in their purchasing decisions more than their older counterparts. Given these trends, directors should guide their companies in aligning core values with evolving societal expectations.
Here are three strategic steps that directors can champion to navigate this complex landscape.
Focus on brand-right values. Effective integration of brand values into business strategy begins with identifying and focusing on values that resonate with the company’s mission and vision. The board should ensure that the company’s unique role in society and the specific impacts it can make are clearly understood and reflected in its strategic objectives.
Take, for example, Freshpet, a pet food company that encapsulates its mission with the phrase “Nourish pets, people, planet.” This succinctly communicates the company’s focus on serving pet owners and reducing its carbon footprint through manufacturing practices. By homing in on values the company can directly influence, Freshpet has built a strong brand identity that not only serves societal needs but also strengthens its market position.
Similarly, The Coca-Cola Company’s emphasis on water stewardship illustrates how aligning a critical resource with both operational and community needs can enhance brand credibility and societal impact. This focus on water sustainability aligns with Coca-Cola’s business needs while also addressing a broader societal concern.
The question of whether the company’s values remain aligned with its mission and vision should be raised at each board meeting. Maintaining a steadfast commitment to core values ensures authenticity and builds trust with stakeholders. Consider Bumble, a company that initially differentiated itself in the saturated dating app market by empowering women to make the first move. However, the brand recently diverged from this core value by allowing men to initiate contact, thereby diluting its original value proposition.
Set goals and report progress. Once the brand’s values are identified, it is the responsibility of board directors to ensure that these values are effectively communicated to stakeholders. Transparency and credibility are paramount, and directors must oversee the company’s approach to disclosing information that directly relates to its core values and business activities.
The company’s efforts must be assessed against measurable standards, as this enhances credibility. Directors should guide management in setting realistic, achievable goals that are clearly linked to the company’s core values. By tracking progress through clear metrics, directors can monitor the company’s commitment to its values and ensure that strategic adjustments are made as needed. For example, rather than proclaiming broad, vague goals like “combating climate change,” the company should focus on specific initiatives like reducing carbon emissions or improving air quality, which are more tangible, measurable and easier to communicate to stakeholders.
Directors play a crucial role in ensuring that the company’s messages resonate with its target audience. They must challenge management to craft messages that are both relatable and memorable, reinforcing the company’s brand values. For instance, e.l.f. Beauty’s commitment to women’s empowerment is exemplified by its board composition, where two-thirds of the members are women — making it one of only four U.S. publicly traded companies with such representation. Ad campaigns should go beyond press releases, using the company’s brand values to build and maintain consumer trust.
Directors must understand that trustworthiness in communication is greatly enhanced when the company’s initiatives are endorsed by credible third parties. Board members should encourage partnerships with global standards organizations, policymakers, trade associations or influencers who can provide unbiased endorsements. These endorsements carry more weight with stakeholders than self-promotion.
Engage internally with intention. Employees are instrumental in the success of value-driven initiatives, and it falls upon directors to ensure that internal communication aligns with these initiatives, keeping employees informed and engaged and fostering a culture of involvement and ownership.
Employee feedback is invaluable for refining strategies and ensuring they are well-received within the organization. Directors should regularly review the effectiveness of employee feedback loops and ensure that the company is responsive to employee input.
Directors have a responsibility to ensure that the company’s commitment to its values is clearly communicated to employees, as this can significantly impact employee retention and loyalty. When employees see that their company is dedicated to making a positive impact, they are more likely to feel proud of their workplace and remain with the company longer.
Employees who are genuinely enthusiastic about the company’s efforts can amplify its message and enhance its reputation with external stakeholders. The company should empower employees to share their firsthand experiences, further solidifying the company’s credibility and trustworthiness.
By actively overseeing these areas, directors can ensure that the alignment of brand values with business strategy is not only communicated effectively but also deeply ingrained in the company’s operations. This strategic oversight is essential for sustainable growth and long-term success in today’s complex business environment.